Sales teams should never discount a product or service – and here’s why

The word cheap can have nasty connotations. Cheap wine, cheap cigarettes, or even just the phrase “oh that guy, he’s cheap”. On a personal level it’s just not nice to hear (especially if it’s directed at you) but for your business, the perception and its effects can be downright devastating.

The price of your product or service correlates directly with the quality of it, or at least the quality perceived by the customer. Why then do so many brands offer discounts on their products and services? And remember, offering a lesser price for damaged, out-of-date or stressed-sale goods is not discounting – it’s just valuing a product according to its quality – so take that out of the equation.

Tesla, or more accurately Tesla’s billionaire CEO Elon Musk, famously went public last year about why his electric premium car company should never offer discounts on its products, and it came down to one word for his brand – integrity.

Unlike the word cheap, integrity does amazing things for a business. Case in point, during a recent sales team coaching session about product pricing we discussed with the team what kind of questions they were asked by their clients.

Not surprisingly, one question always front of mind was the request for discounted products and services. All of the team members had the same reaction – that their customers often asked for a discount, and often they would receive it.

The sales team had a mindset that the customer should get what they ask for. Happy customer equalled sale secured equalled happy boss. But all is not what it seems when you give in on price.

The damage of the discount

Removing value from a product or service on a one-off basis is one thing; giving your customers the perception that you aren’t worth the money from the get-go is something else entirely. The answer? A little bit of homework.

To address this situation, we gave the sales team an assignment to do before the next coaching session.

We directed each person on the team to ask for a discount the next time they were purchasing something – anything – and take note of the salesperson’s reaction and the result.

The power of perception

One of the sales team members, Jane, shared that she had asked for a discount on a product she was wanting to purchase, and that the sales assistant had denied her – confidently and with a fair explanation of why.

“This is a really high quality product and we’re just not able to negotiate on price,” the salesperson said. Interestingly and quite naturally, Jane understood straight away that the perceived value of the product was premium, and that it must have been worth the money she was paying.

Not only that, Jane said she was extremely satisfied with the product and had more of an affinity for it when she used it. That’s the power of integrity in a business.

Conversely, another member of the sales team, Mark, asked for a discount on another high value product even though he had already decided he was willing to pay full price.

Without hesitating, the sales assistant gave him the discount. Mark explained that despite his sense of accomplishment at gaining a discount, the value perception of the product he’d just bought changed. He went into the store expecting to pay full price and received quite a significant discount – 10% in fact.

And the kicker? “It made me look at the product in a different light. It felt cheap all of a sudden, especially with such a big discount. It felt like something must have been wrong with it that I didn’t know about,” Mark said.

Integrity.

The satisfaction outcomes of Mark and Jane’s purchases were quite different. Jane thought that the product she purchased was of high value and worth what she paid, and Mark felt the opposite way.

The sales team no longer offers discounts on its products and services.

Key takeaway: If you can make your customer perceive the value of your product or service, and articulate your differentiation, you should never have to offer a discount on your product. Never.